GM workers victim of disappearing jobs
Economists say a greater reliance on automated production is to blame 27%
TED GRIFFITH and STEVEN CHURCH
www.delawareonline.com
05/22/2004
Workers at General Motors' assembly plant near Newport have grown used to temporary layoffs to cope with weak sales or the launch of a new model.
This time is different.
Workers and economists said Friday that many of the 872 people about to be laid off won't be coming back.
Job loss is inevitable in auto manufacturing because technology is allowing more and more functions to be automated, economists said. In the past five years, auto manufacturing em-
ployment in the state has tumbled 27 percent to about 4,600, according to the state Department of Labor.
"These types of jobs are on the decline," said James Butkiewicz, an economics professor at the University of Delaware in Newark. "Whenever they can, companies will use technology to replace jobs done by people."
In a letter filed with the state Department of Labor, Detroit-based GM said it will eliminate 872 jobs, or nearly three-quarters of the assembly line work force, at the Saturn plant near Newport. In the notice, required by federal law, the automaker called the job reduction "permanent."
GM spokesman Dan Flores said Friday that the company had to describe the layoffs as permanent because it doesn't have a date for when workers could be called back. He said GM hopes that some employees could return to make the Pontiac Solstice, scheduled for production at the plant next summer, and an unnamed Saturn sports car the following year.
Flores said he could not estimate how many employees might be called back. He said some employees also may be eligible to retire or transfer to another GM plant.
Different from the past
Workers on Friday said the atmosphere in the plant was different from past layoffs because this time there is an assumption that some of the cuts will be permanent. Assembly line employees at Steve's Discount Liquors, a popular tavern near the plant, said Friday the level of concern depended on how much seniority a worker had.
Kevin Jones, of New Castle, said there was a lot of talk about how employees would be affected under the layoff provisions of the union's contract. Laid-off employees receive unemployment benefits from GM for up to 95 percent of their base wages for up to 42 weeks, after which they join the company's jobs bank. Once in the jobs bank, employees can be transferred to other GM plants.
"There are folks over there who are never coming back," Jones said.
Jones said that because he has been with the company for 27 years - since he was 20 years old - he is sure he will be back when the Pontiac Solstice begins production in summer 2005.
David Littmann, chief economist with Comerica Inc., a Detroit-based bank, said chances are likely to be "very poor" for a significant recovery in jobs at the GM plant. Littmann said next year probably will be disappointing for the industry because rising interest rates on auto loans will hurt sales. Further, the economist said, GM is losing market share to rivals, such as Toyota.
Even when production resumes at the plant, the odds would seem to be against a large number of workers being recalled because production isn't expected to return to previous levels, said Mike Helmar, a regional economist at West Chester, Pa.-based Economy.com.
"It will likely be a considerably smaller operation," said Helmar, a former official with the Delaware Economic Development Office.
In an another sign of apparent softness in the state's auto manufacturing sector, Stuttgart, Germany-based DaimlerChrysler AG revealed this week that its plant in Newark is cutting back operations by one day a week beginning in June. A company spokeswoman called the shift a "test" and wouldn't say whether the altered work schedule, which will remain in effect during June and July, would reduce production.
More losses expected
Job losses in the auto manufacturing sector will have a significant ripple effect on the state, economists said. Butkiewicz, of UD, estimated that each job lost at the GM plant would translate into a loss of 1.5 jobs at businesses that have relied on the plant. The Saturn plant contributed about $315 million to the state's economy in direct and indirect jobs last year, according to the Delaware Economic Development Office.
Five companies supply the plant and at least one is already cutting back because of the discontinuation of the Saturn L-series.
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